The North East should be allowed to set its own airport taxes to see off a threat from Scotland, according to a business-led think tank.

As families across the country jet off on their summer holidays, Policy North has warned of “catastrophic” consequences for Newcastle Airport if it is left undefended against Scottish air travel tax cuts.

It follows the devolution of Air Passenger Duty (APD) to Scotland - allowing the Scottish Government to cut it North of the border.

Scotland’s SNP Government has announced it will the tax, renamed Air Departure Tax in Scotland, by 50%. And eventually it hopes to scrap the tax entirely.

Policy North’s ‘Global North’ report found that families could save up to £194 per person by flying from Edinburgh instead of Newcastle.

It follows a warning from Newcastle Airport earlier this year that if the tax is abolished entirely in Scotland, it could lose between 500,000 and 900,000 passengers a year - or up to 20% of its total number.

Policy North called on the Government to grant the North East special status due to its close proximity to Scotland.

Passengers flock to Newcastle Airport for the great Summer getaway (Image: newcastle chronicle)

The think tank says the North East should be given the power to set the rate of APD in the region, or risk losing vital transport links and business to Scotland.

Policy North chair, Stephen Purvis, said: “As our report sets out, if nothing is done to support regional airports from the Scottish Government’s ADT devolution, the consequences could be catastrophic.

“Saving up to £194 per person slashes a huge amount off a family’s annual holiday spend, and in the face of such savings, it would be hard for families to turn down the opportunity to fly for cheaper – especially when Edinburgh Airport is less than 100 miles up the road.

“However, there is another consideration that stems beyond the annual holiday rush. The risk to the North East and the North as a whole is that more companies will decide to invest in Scotland because of their cheaper air travel.

“Hard-earned international air routes that took decades to attract as industry was rebuilt in the North East could be squandered – something which could ground growth in the North East as a whole.

“It is vitally important that the Government takes this opportunity to reassure airports such as Newcastle by guaranteeing that they will not be adversely impacted by these changes – putting this issue to bed was one of our Global North report’s key connectivity objectives, and we hope local and national decision makers act accordingly.”

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Air Passenger Duty is a tax charged on each adult passenger on flights leaving the UK. For the longest flights, of more than 6,000 miles, it is currently charged at £97 for passengers in the in the cheapest seats on the plane (probably economy class) or £194 in other seats.

Former Prime Minister David Cameron promised in March 2015 to take action to protect English regional airports once APD was devolved to Scotland.

But last year, the Government announced it had decided to do nothing until after we leave the EU.

And Transport Minister Lord Callanan confirmed there would be no immediate action when he visited Newcastle Airport in July.

He said: “We can’t predict what might happen in future budgets so let’s wait to see what happens with it in Scotland first.”